On the back of soaring housing prices, a growing number of South Koreans in their 20s and 30s have rushed to buying apartments, with nearly four out of 10 Seoul apartments being purchased by those young buyers, data showed on September 23.
According to data from the Korea Real Estate Board, people in their 30s bought a total of 12,550 homes in the capital Seoul between January and July, which accounted for 36.9 per cent of the total 34,045 properties that changed hands in the given period. Those aged 20-29 or younger, who purchased a total of 1,702 apartments, took up five per cent.
This means buyers in their 30s and 40s accounted for 41.9 per cent of Seoul apartment sales, extending an upward trend from 31.8 per cent in 2019 and last year’s 37.4 per cent.
Meanwhile, home buyers in their 40s, 50s, 60s and 70s or older, accounted for 26.2 per cent, 15.5 per cent, 8.8 per cent and 5.6 per cent of the total transactions in the January-July period, respectively.
Young buyers also continued their spending spree on property in nearby areas.
Nearly 35.8 per cent of 124,391 apartment purchases in Gyeonggi province were made by people in their 30s or younger, during the same period, sharply up from 30.4 per cent last year. The figure for Incheon came in at 32.6 per cent of 33,524 transactions, gaining 5.4 percentage points from a year earlier, data showed.
Young people’s panic buying trend in the local real estate market has gathered momentum despite the tougher lending regulations.
Since July, the policymaking Financial Services Commission (FSC) has applied a stricter lending calculation for mortgage loans, called the debt service ratio, which measures how much a borrower has to pay in principal and interest payments in proportion to his or her yearly income.
Under the new rule that only applies to first-tier banking circles, a borrower’s mortgage payments cannot exceed 40 per cent of annual income if the home costs more than 600 million won ($500,000) in designated speculative areas.
Experts say the trend of young Koreans taking out credit loans to fund purchases will continue as long as apartment prices in Seoul and nearby cities keep rising, based on fears that they might never be able to own a home if they wait any longer.
Park Won-kab, who leads the real estate team at KB Kookmin Bank, said: “Koreans in their 20s and 30s hurried to buy homes since apartment prices surged not only in the wealthy Gangnam area of Seoul, but also in Gangbuk.
“As housing prices in Seoul seem to maintain an upward trend for the time being, they have increasingly turned to buying undervalued apartments the non-Seoul metropolitan regions.”
The average price of apartments in Seoul, climbed nearly 100 million won or 9.7 per cent in the first six months of this year to 1.14 billion won, according to data compiled by KB Kookmin Bank.
THE KOREA HERALD/ASIA NEWS NETWORK